Sainsbury’s and Asda’s distribution networks could be a target for cuts if the proposed merger between the two supermarket giants goes ahead, a retail analyst warned this week.
The merger agreement between J Sainsbury’s and Asda’s owner Walmart, would see both supermarket groups maintain their distinct brands, creating an estate of 2,800 Sainsbury’s and Asda stores, with almost a third of the grocery market by share.
If the deal gets the go ahead from the Competition and Markets Authority it will also create a combined in-house fleet of nearly 1,500 vehicles, along with a combined network of dozens of primary and secondary logistics suppliers and scores of depots across the country.
Whilst Sainsbury’s and Walmart insist the merger will not see stores closed, analysts are predicting that if the merger gets the go ahead the retailers’ distribution networks could be a target for cuts.
David Madden market analyst for CMC Markets UK, told MT: “Wherever there is duplication of distribution chains and depots we should expect to be some trimming down, if not in the first phase then somewhere down the line.
"And it will be the distribution network and the depots that are the more likely targets for cuts, because while customers might care about a local store closing down they will not care how and from which depot their goods are delivered to the store.”
Asked if the merger could see a restructuring of the logistics operations of the three brands, an Asda spokeswoman told MT: “It is early days in terms of the details but Asda will remain Asda, operating as an individual brand so we won’t see a complete merger of everything.
“In terms of distribution we haven’t got that far in terms of the specifics. There are definitely synergies between the two businesses but how that will look in real terms we could not say at this stage.”
RHA warned against any restructuring of the supply chain that will result in driver job cuts.
Rod McKenzie, RHA director of policy and public affairs, told MT: “We are waiting for more details on the proposed merger. However any move that means lorry drivers are laid off is bad for business and bad for our industry.”
It comes after Tesco's merger with wholesaler Booker earlier this year.
